CENT526 - Biography.docx

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Ryerson University
Entrepreneurship and Strategy
ENT 526

Entrepreneur Biography Li Ka-Shing ENT526 A+ An Analysis of Li Ka-Shing Industry Information Li is currently chair of two conglomerates which includes: Cheung Kong (Holdings) Limited and Hutchison Whampoa Limited (HWL). The focus of this analysis will be on HWL (the larger of the two conglomerates) as well specifically, its Hong Kong Ports and related services division which generated 45 percent of HWL‟s annual revenue (HWL, 2011). With Asia‟s rapid expansion and development into the international market the port industry plays an important role in connecting Asia with the rest of the world and in maintaining its global competitiveness. HWL‟s Macro-environment - Economic conditions: Hong Kong‟s GDP is US$260.471 billion (2011 estimates) and its real GDP growth is approximately 2.6% (Global Finance, 2012). - Technology: being in a technological industry it will continue building up its IT systems to meet market and customer needs. For example, areas for technological developments includes introduction of Electronic Data Interchange (EDI) service to customers, improving its systems and operational efficiency, as well its online services to meet market demand. In addition, technology will play the greatest role in three areas which includes: training, technical assistance and research (Teng and Xiang, 2007). - Societal and Demographics: Hong Kong lies at the mouth of the Pearl River Delta while strategically located to China and neighbouring Asian countries. Its main focus is its manufacturing industries. As well, foreign investment are growing rapidly for example, foreign direct investment is up 17% from 2010 to 2011 (HKTDC, 2013). All this will boost the size workforce of the cargo flow in the region. - Population demographics: Hong Kong‟s population is approximately 7.17 million (2012) with a 0.1% growth (Global Finance, 2012). 1 - Legislations and regulations: Hong Kong is a free trade port while, regulations were tighter since 911 adding some uncertainty to custom procedure. HWL‟s Micro-environment - Suppliers: The bargaining power of supplier is low because the industry is relatively old therefore, raw material and technology from suppliers are cheap. Moreover, there are many suppliers and a low switching cost. - Rival firms: there is high competition among current rival firms because industry growth is slow, there is high fixed cost, as well there are low switching costs for buyers and competitors provide standardized services. In addition, the ports such as Hong Kong and Singapore will face increasing competition as other facilities – notably Shanghai and South China – are established and expansion to take share of regional transshipment trade. Similarly, the ports of Singapore will face increasing price competition, as other facilities – notably Tanjung Pelepas in Malaysia – are established and expansion to take a share of the regional transshipment trade. - New entrants: Is very low because very high barrier of entry, huge amount of money have to be invested, high land cost in Hong Kong, high human costs for skilled workers and high exit barrier. - Buyers: The bargaining power of customers are high because the top 10 customers contribute to more than 80 percentage of the volume therefore, they have high bargaining power. Buyers also have low switching costs. - Substitute products: Substitute products are medium because Hong Kong faces competition from lower cost ports namely Kaohsiung Taiwan. - Strengths: Its core strengths are its good freight transportation infrastructure, there is good efficiency and reliability of terminal operation (i.e. Hong Kong can operate more than 40 gantry crane moves per hour), and also Hong Kong‟s financial institutions are recognized globally. - Weakness: Hong Kong has been criticized as having one of the highest terminal charges (i.e. tariff taxes) compared to bordering ports including China and Taiwan as well, having a bottleneck border crossing. 2 Drivers of Change - Increasing international lines therefore, increasing frequency of services through Hong Kong (i.e. increasing throughputs – a common measure in the port business) - Increase IT spending - Maintain/increase market share via responsiveness to customers request and complaints handling Industry Key Success Factors - Geographic advantage - Reputable brand image - Innovative - High efficiency - Dominant Market Share Entrepreneur’s Background th Li Ka-shing, ranked 8 according to Forbes magazine richest billionaires has both strengths and weaknesses. Li was born in Chaozou province China in 1928. He was born in a poor family which fled China to go to Hong Kong in 1940 because of the Japanese invasion. One of his strengths that made him an entrepreneur was that he was opportunity driven. Despite the conflict that was happening in China and the death of his father, in 1950, he decided to start a manufacturing company that was focused on high quality plastics. He decided on this by doing research, watching the news as well learning how to operate a plant. He then used both his personal savings as well as borrowed money from his family and friends to create his first company. Through his struggles, one of his early weaknesses was his sacrifice of education for business. His lack of formal education prevented him from following his father‟s footsteps as a school headmaster. Instead, one of his first jobs he took was a sales man, selling watches at his uncle's store in Hong Kong. 3 Another strength that Li possessed was his leadership and management style. He was known for his work ethics. For example, while others worked eight hours a day, he would work sixteen. His daily routine would consist of waking up at 6:30 am every morning and working till 6:30 at night and quite often, he would work twelve to sixteen hours a day. Moreover, another strength in his management style he was known for was his decisiveness yet strategic personality. For example, when he was operating his plastic company, he would look to hire the best specialist he could find. Through that, he was able to differentiate himself from competitors by having the best quality products (thereby, he recognized quality was directly related to perceived value). He eventually became one of the biggest exporters of plastics in Asia as well developed strong international ties for his quality known products. A weakness in his management style (more evident in h
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